Seoul Rehabilitation Court Establishes 'Rapid Discharge System for Vulnerable Debtors' "Effect of Reducing Time and Costs"

Bankruptcy Declaration with Simultaneous Dismissal and Discharge

Seoul Seocho-gu Seoul Rehabilitation Court
[Photo by Yonhap News]

[Asia Economy Reporter Kim Daehyun] The Seoul Rehabilitation Court will implement the 'Rapid Discharge System' starting next month on the 1st, in cooperation with the Credit Recovery Committee (Shinbokwi), which simultaneously dismisses bankruptcy proceedings and grants discharge upon bankruptcy declaration for vulnerable debtors.

Although a discharge decision does not eliminate or reduce the debt itself, it limits the debtor's liability, meaning the debtor is only responsible within the scope of the assets they possessed at the time of the bankruptcy declaration.

This system aims to stabilize the livelihoods of vulnerable groups and facilitate their swift return to economic activities, with expectations of reduced costs and significantly shortened periods leading to discharge.

On the 27th, the court announced, "Recently, the court held a meeting with Shinbokwi and agreed to implement the Rapid Discharge System for vulnerable debtors applying for personal bankruptcy and discharge through Shinbokwi."

The support targets vulnerable debtors who are basic livelihood security recipients, elderly aged 70 or above, or severely disabled individuals with low income potential and little or no assets.

When Shinbokwi submits a 'Credit Counseling Report' to the court, which investigates the applicant's debt details, income, and assets, the court promptly proceeds with a procedure to hear creditors' opinions regarding the discharge. If there are no special objections, the court issues a dismissal and discharge decision simultaneously with the bankruptcy declaration; if objections arise, a bankruptcy trustee is appointed to proceed.

The opinion request sent to creditors includes the phrase, 'This case is a bankruptcy and discharge application for a vulnerable debtor such as a basic livelihood security recipient, elderly aged 70 or above, or severely disabled person, routed through the Credit Recovery Committee. This is a case subject to the Seoul Rehabilitation Court's Rapid Discharge System for vulnerable debtors. Accordingly, if there are no special objections from creditors, a bankruptcy declaration, simultaneous dismissal, and discharge approval decision will be made.'

A court official stated, "Since the bankruptcy procedure ends without appointing a bankruptcy trustee, costs related to appointing a trustee can be saved," and added, "the period from filing to discharge, which usually takes about 4 to 5 months, could be shortened to within 2 months." Furthermore, "It is expected to greatly help stabilize the lives of vulnerable debtors and support their swift recovery," they added.

Data provided by Seoul Rehabilitation Court.

This content was produced with the assistance of AI translation services.